A Tale of Two Pipelines

Fossil fuel pipelines on both sides of the Atlantic have been in the news recently — one for nearing completion and the other for being halted. Both have interesting international implications and each pipeline’s story defies convenient narratives based solely around climate change. In this tale of two pipelines, I’m for the completion of one and against the completion of the other. Unfortunately, the reverse is actually happening in reality. Let’s start with the pipeline that I support, yet is now being shut down — possibly for good.

Keystone XL: Canada to Gulf of Mexico

The Keystone XL pipeline has been a political football since at least the Obama administration and has been approved and cancelled more times than is reasonable for a project of this scale. Now it seems to have taken its final breath, as the newly-inaugurated President Joe Biden signed an executive order — on his first day in office, no less — revoking the pipeline’s permit and halting future construction. This isn’t a surprising decision, but it is quite a bad one, for myriad reasons.

First of all, let’s take the Biden administration’s stated rationale for cancelling the pipeline’s permit: “Leaving the Keystone XL pipeline permit in place would not be consistent with my Administration’s economic and climate imperatives.” If this is the base reasoning for the cancellation, as it seems to be, it is seriously weak tea. Cancelling a new pipeline project meant to help deliver Albertan oil to American Gulf refineries will do very little (if anything) to ameliorate climate change. The revocation of one permit will not alter how much oil is produced in Alberta, nor will it change how much oil is refined in American facilities. That Canadian oil will still transit the border on its way to American refineries, but now it will travel in far more dangerous conditions; instead of flowing through a safe pipeline, it will travel via rail, tanker ship, or truck. All of those alternate methods are less safe than are pipelines when it comes to spillage, as well as generating far more carbon emissions than would a generic pipeline. And Keystone XL was not just any generic pipeline: it was on track to be the first pipeline to be constructed and operated in an entirely carbon-neutral manner.

Changing the supply situation by halting pipeline construction will not alter the insatiable American demand for fuel. Now, instead of buying more oil from our ally and neighbor Canada, we’ll be importing such fuel from repressive (and often antagonistic) states like Saudi Arabia, Russia, and Venezuela. American energy independence is not only an issue of nationalism, it allows us far more freedom in foreign relations. If we continue to develop our own resources and partner with stable, long-term allies like Canada, we can have the whip hand in our relations with other oil-producing states. The fracking revolution and the success of American energy production and refining have bolstered our economy and our strength abroad. Gone are the days of kowtowing to OPEC diktats and basing our foreign policy on keeping the oil flowing into our ports; that is, unless the Biden administration and its progressive allies get their way on domestic energy production.

Speaking of foreign relations challenges brought up by the poor choice to cancel Keystone XL, we have started this new period in American politics with a slap in the face to our neighbor to the north. America’s relationship with Canada is one of the most important alliances that we have. We share a continent, a culture, a language (at least part of the time), and a history of liberalism and economic cooperation. We also used to work together on large-scale, long-term projects meant to tie our nations closer together and generate prosperity in both countries. Keystone XL was to be one of those projects, but we have clearly not held up our end of the bargain. The pipeline has been in the works since at least 2008 and it is frankly embarrassing that we cannot get our politicians to be consistent enough to complete such an important infrastructure project. I’m not alone in thinking this either; Alberta’s Premier has spoken out against the cancellation and has even called for potential trade sanctions on the US for backing out. He said that “It is a insult directed at the United States most important ally and trading partner on day one of a new administration,” and he’s not at all wrong. Even the fairly weak-kneed Canadian Prime Minister Justin Trudeau expressed his disappointment in Biden’s decision, as he lobbied for a continuation of the project on his calls with Biden before the inauguration.

Map of the Keystone pipeline; XL is denoted by a dotted line.

Leaving aside the betrayal of our friends in the Great White North, this action is an economic disaster. It shows that the US is absolutely not a good place for long-term capital investment, despite our claim to be. Our regulatory apparatus, long seen around the world as one of the gold standards in that field, has been thrown aside like a rotten piece of fruit. Keystone XL was the longest-studied infrastructure project in American history, had jumped any and all regulatory hurdles put in its path, and was deemed both legally and environmentally sound. No matter. Since its cancellation was clamored for by the climate activists, it was indeed stopped. That such a well-studied and regulated project could be unceremoniously discarded entirely due to partisan political concerns speaks ill of our government and our nation’s ability to get things done in the long-term. Why would a company invest so much time and money in the American regulatory process when their project could be halted on a whim? This sort of action will only serve to drive foreign investment in other nations and reduce our own competitiveness, harming our economy for decades to come.

Not only does the revocation of Keystone XL’s permit harm our economic prognosis in the future, it hurts thousands of American workers today. The cancellation of the pipeline will cost tens of thousands of jobs on both sides of the border, losses which have already begun to manifest. The US State Department estimated that over 26,000 jobs would have been supported by the pipeline, many located in small towns and rural areas where poverty and unemployment are high. Other estimates claim that nearly 60,000 jobs would have been created by this pipeline, a great deal of which were full-time union positions totaling nearly $3.5 billion in wages. Some of these benefits would have accrued to (arguably) the most oppressed people in North America: American Indians and other Native tribes. For instance, one tribe in Canada would have received a 30-year contract for local jobs and investment in a tribal community where over 50% of people are unemployed. All of this comes during a world-historic pandemic and recession, where good-paying, stable jobs are at a premium. One would think that the Biden administration would seek to soften this blow through conciliatory rhetoric or compassionate actions. Instead, what we’ve seen is an incredible lack of care and empathy for these workers from the people tasked with Biden’s agenda. Climate ‘czar’ John Kerry — a man most famous for losing a Presidential election, sucking up to Iranian mullahs, and marrying a billionaire heiress — said, when asked about the job losses concomitant with the Keystone cancellation, that these laid-off workers “can be the people to go to work to make the solar panels.” This out-of-touch rhetoric is unhelpful and shows a clear lack of empathy for those who spent their lives working in the energy field. It isn’t, and shouldn’t be, helping the administration’s case.

Finally, if climate change is as much of an existential threat as activists claim, revoking this permit will essentially do nothing to fix the problem. As I’ve said on my podcast, I doubt the extreme claims of activists on climate change, but I do believe that it is a concern that should be addressed. We need to reduce emissions and part of that process is reducing our reliance on coal and switching to cleaner fuels — including cleaner fossil fuels like oil and natural gas. Keystone XL would have been beneficial in that regard, not detrimental. Altogether, it is an awful decision to have cancelled this project; it harms our energy independence, our economic future, our foreign policy, and our ability to attract promising long-term capital investment.

Nord Stream 2: Russia to Germany

Map of the nearly-completed Nord Stream 2 pipeline, along with existing Baltic Sea pipeline infrastructure.

Although I feel that the Biden administration is wrong to have cancelled the Keystone XL pipeline, I think that the German government is making a far worse decision in pushing for the conclusion of their own controversial pipeline project: Nord Stream 2. The proposed Nord Stream 2 pipeline, which is only miles from completion, would send Russian natural gas under the Baltic Sea directly to German receiving stations, doubling the current gas exported by that method. It would bypass alternate routes through Eastern Europe, including a well-established passage via Ukraine, reducing the fees those nations receive from the transit. The issues surrounding this pipeline are far less complex than those around Keystone XL and should unite both Europeans and Americans in opposition to its fulfillment. As I stated above, I’m a strong supporter of natural gas as a way to reduce emissions while still satisfying energy demand. Given my support for the Keystone XL pipeline, I’m clearly not against the idea of pipelines, fossil fuels, or large-scale infrastructure projects. What I am forcefully opposed to, however, is the Russian government. Nord Stream 2 is nothing more than a giveaway to Putin’s regime: it enriches him and his cronies, it sells out European security to an antagonistic and revanchist power, and harms German relations with the US and EU.

First off, the pipeline is a corrupt project which will entrench Putin’s power in Russia and increase the already-massive wealth of himself and his henchmen. Russia has long been an energy supplier for Europe, largely operating through its state-owned monopoly Gazprom, a company with deep ties to the Putin regime. That state-owned entity has been credibly accused of funneling money away from the Russian people and into the pockets of the well-connected. Given the extreme poverty of so many Russian citizens and the inability for them to compete in a truly capitalist economy, this is unacceptable. As the Nord Stream pipelines are owned and operated by the Russian companies, this is basically a giveaway to a horrific regime. If you can believe it, the German connection is even shadier. Former Chancellor Gerhard Schröder is a long-time pal of Putin’s and has been paid massive fees for his support of the pipeline, as well as holding many offices in Russia as a key proponent of the regime. His dealings with Putin have been sketchy from the start, especially over the pipeline issue. Just before leaving office in Germany in 2005, Schröder approved the first Nord Stream pipeline over considerable opposition; just after leaving office, he was named chairman of the Russian side of the project, reaping large financial rewards. Schröder routinely travels the world talking up the Putin regime and excusing its repressive actions both domestically and internationally. This corruption is endemic in Russia and is exemplified by the Nord Stream 2 project.

The corruption and enrichment of Putin’s cronies is only a small part of the reason why the Nord Stream 2 pipeline should be cancelled. Far more important is the fact that it sells out German — and by proxy, European — security to Russia, a country dedicated to undermining Europe. Evidence of this Russian project of European dominance is omnipresent and does not need to be recapitulated here. What does need some explication is how a natural gas pipeline plays into that broader Russian project. In general, bypassing the current Eastern European pipeline infrastructure harms those nations, making them more reliant on Russia. How does this happen? Well, those nations receive payments for allowing Russian gas to transit their territory, payments which would be greatly reduced if more gas transits through alternate routes. By reducing their financial means of independence, nations like Belarus and Ukraine fall more into the Russian orbit. Not only does this pipeline harm those Eastern European nations, it grants Russia an enormous degree of leverage over Germany and its foreign policy. In the past, Russia has used its gas supplies to bully European nations into falling into line with its own policy. Ukraine has been a prime target of this sort of action over the past decade and a half, with Russia halting gas supplies to the country and freezing it into compliance. German reliance on Russian gas for energy will only allow Russia to exert this power over Europe’s most economically dominant country. As Germany often sets the example of policy for the rest of the European Union, this gives Russia an edge it does not deserve. As shown by the Putin’s regime’s attacks on dissidents at home and abroad, Russia is no stranger to interfering in the affairs of other nations; Germany should not give such a regime any greater influence over it than is absolutely necessary.

The Nord Stream 2 pipeline also hurts Germany’s relationships with other EU countries as well as the United States. As said above, many European nations oppose the pipeline, including ones which are directly impacted by the new energy routing. But other Eastern European countries, including Poland and the Baltic states — which are reasonably wary of Russian influence given their Soviet history — also oppose the pipeline. None of these countries wishes to see the Russian umbrella cover their own territory again and are rationally opposed to increased Russian influence over Europe’s largest economy. The European Commission has criticized the project and the European Parliament has routinely voted against it. For a country which speaks highly of its ‘European values’, Germany is ignoring the multitude of European nations which oppose them on this issue. As wary as Germans are of appearing as the continental hegemon, they seem curiously out-of-step on this significant challenge to that appearance. European relations aren’t the only ones impacted here; US relations are also being harmed. The US has (properly) sanctioned any and all companies participating in the project for their support of the Russian regime and other targeted entities. By refusing to go along with those sanctions in the spirit of unity in the face of the Russian threat, Germany is making itself seem like less of a friend of the US than it is a friend of the Russians. Even the Biden administration is pushing these sanctions, so the excuse presented by former President Trump is no longer operable. One would hope that the German government would prioritize relations with the US versus those with Russia, but it seems as though they are heading in the opposite direction.

So what’s the solution here? Should Germany — and Europe more broadly — simply freeze to death in winter due to lack of fuel? Of course not. Should they buy energy from Russia, cementing that nation’s leverage over the EU? Also no. Instead, they should work with their NATO allies on this side of the Atlantic and import fuel, both liquid natural gas (LNG) and oil, from the US and Canada. We have none of the obvious issues which come along with dealing with Putin, produce massive amounts of fuel for export, and are historic friends of the Europeans. What’s not to love? The Merkel government should halt construction on the pipeline and instead invest in building more LNG terminals and further allying themselves with the Western hemisphere. NATO is only as good as we make it, and inviting Russia into Europe through the back door is terrible for the Atlantic Alliance.

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